Shire outlines an Astra-style defence against £27bn bid from AbbVie

The ADHD drugmaker has already rejected three bids from its US rival

Pharmaceutical giant Shire stepped up its defence against a £27bn bid from US rival AbbVie yesterday by outlining a long-term plan it believes will convince investors to keep it independent. 

The ADHD drugmaker, which shifted its headquarters to Dublin in 2008 to take advantage of Ireland’s low corporate tax rate, has already rejected three bids from Abbvie, the last one valuing it at £46.26 a share. But in a call to investors and City analysts, Shire, chaired by Susan Kilsby, followed AstraZeneca’s lead by giving long-range sales forecasts for its drugs to help prove that AbbVie’s offer undervalues the business.

The company said it plans to more than double sales to $10bn (£5.8bn) by 2020, citing hyperactivity medicine Vyvanse – which is now also being tested as a treatment for binge eating – and dry-eye disease drug Lifitegrast as key areas of growth.

Chief executive Flemming Ornskov said sales could even exceed this figure because the long-term forecasts do not include revenue from future deals. Shire bought rare disease specialist Viropharma for $4.2bn last year and has hinted that it remains on the lookout for other acquisitions. “The board believes that Shire’s focused growth strategy and efficient cost base will continue to deliver significant shareholder value and patient benefits,”  he said. “M&A will clearly add growth to the profile. If I included that in the upside it would be way north of $10bn.”

Mr Ornskov said in the medium term sales should hit $6.5bn in 2016. Shire also highlighted the risks associated with AbbVie’s plan to cut its corporate tax bill by redomiciling in Britain – which was also the intention of Astra’s failed suitor Pfizer. Such ambitions have sparked political concerns on both sides of the Atlantic.

In response, AbbVie raised its own outlook for 2014, citing experimental cancer and multiple sclerosis drugs as its own growth areas. The company said it expects earnings-per-share to be between $3.06 and $3.16 this year.

Pharma analysts at Jefferies predict Shire investors would back a deal priced at about £55 a share. Shares in Shire, which hit an all-time high on Friday, fell 68p to 4,303p.

Mick Cooper, analyst at Edison Investment Research, said: “Shire’s understandably robust defence has credibility given the company’s current strong growth and improvement in operating margins. The targets may appear a stretch, but Shire has dominant positions in very attractive niche markets and these should be achievable.”

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power